Wed January 16, 2013

Gov Proposes More Tax Cuts In 2013 State Of The State

Gov. Sam Brownback has laid out his priorities for the legislative session. During a speech Tuesday night, Brownback made proposals dealing with taxes, the budget and more.

Brownback has proposed keeping a temporary sales tax increase on the books. Most of the 1 percent sales tax increase was set to expire later this year, but it would stay under Brownback’s plan.

Last year, lawmakers passed a cut to personal and business income taxes, and now Brownback is pushing for a further reduction in personal income tax rates, and eventually, eliminating them altogether.

“Tonight, we’re here to take another step on our path to no state income taxes," said Brownback.

"This will create jobs and opportunities in our state , that the current generation has left for Texas or Florida to find.”

Brownback has maintained that he’ll protect what he calls “core services,” like education.

“This glide path to zero will not cut funding to schools, higher education or essential safety net programs. And for those who come to Kansas or stay in Kansas because of lower taxes, let me tell you, opportunities abound,” he said.

Lawmakers should continue to look for efficiencies in state government, says Brownback. He’s proposed merging the Kansas Department of Transportation and the Kansas Turnpike Authority.

“One of the clearest examples of duplication in state government is the fact that we have two highway departments," he said. "It is time that we realized the efficiencies to be gained by replacing these two operations and putting them under the same umbrella."

A large specter looming over the speech was a court ruling from last week, where judges said the state needs to increase education funding. That decision will be appealed to the Kansas Supreme Court. But it’s caused a divide between the courts and some lawmakers.

Gov. Brownback asked legislators to take action on the issue to assert their position.

“So I ask you to make it clear in law that defining what is a suitable provision for public funding of education is a job for the people’s elected representatives and not one else,” he said.

Brownback left out some specific details of his tax and budget plan. The details will likely come later Wednesday and could impact the type of reception his tax plan gets from lawmakers.

Les Donovan, a Wichita Republican, heads the Senate Tax Committee. He says many lawmakers are going to be looking for at least a dollar-for-dollar swap between the dollars raised by keeping the higher sales tax rate, and the dollars cut by lowering income taxes.

“If it turns out to be that the income tax does not cut taxes as much as the sales tax increases taxes, it’s going to be a tougher sell to the members of the Legislature,” said Donovan.

Democratic leaders in the legislature questioned Brownback’s proposal to cut taxes more, when the state is already projected to see budget deficits in the coming year, largely from the tax cut already passed.

“It’s a huge gamble” said Paul Davis, the top Democrat in the House.

He’s not convinced cutting taxes will drive economic growth enough to offset the loss in revenue. He says that would mean more cuts to state services and education.

“There are so many other things that factor into the performance of a state’s economy and a national economy," said Davis. "And I think putting all your eggs in one basket, like Gov. Brownback is doing, is something that could look very foolish years down the road.”

Legislators will now start the months-long process of digesting the governor’s proposal, and building the budget.